2005年-世界发展银行全球_Corporate_Governance_and_Bank_Performance___A_Joint_Analysis_of_the_Static_Selection_and_Dynamic_Effects_of_Domestic_Foreign_and_State_Ownership_43页_545kb

Summary of "Corporate Governance and Bank Performance: A Joint Analysis of the Static, Selection, and Dynamic Effects of Domestic, Foreign, and State Ownership"

Core Content

This paper jointly analyzes the static, selection, and dynamic effects of domestic, foreign, and state ownership on bank performance, using data from Argentine banks in the 1990s. The study emphasizes the importance of considering all three types of governance in the same model to avoid misspecification and biased results.

The authors argue that the static effect refers to the long-term performance differences associated with a constant type of ownership, the selection effect refers to the performance of banks that undergo ownership changes, and the dynamic effect refers to the performance changes that occur after the ownership transition.

Main Points

• State Ownership:

  • State-owned banks had poor long-term performance (static effect).
  • Banks undergoing privatization had particularly poor performance before the change (selection effect).
  • Following privatization, these banks showed dramatic performance improvements (dynamic effect), although much of this improvement may be due to nonperforming loans being transferred to residual entities, leaving "good" privatized banks.

• Foreign Ownership:

  • Foreign-owned banks generally had better performance in developing nations due to superior access to capital markets and technology.
  • However, they had ambiguous or negative effects on SME credit availability.
  • In Argentina, foreign ownership was associated with greater credit availability but not necessarily with improved SME lending.

• Domestic Ownership and M&A:

  • Studies on U.S. banks suggest that domestic M&As can lead to modest improvements in profit efficiency and portfolio shifts towards higher-return lending.
  • However, static efficiency differences between domestic and foreign/state-owned banks are often neglected in the literature.

Key Findings

• The static, selection, and dynamic effects of ownership types are not typically analyzed together in existing studies, which can lead to incomplete or biased conclusions.
• The nonrobustness checks in the paper highlight the importance of including all relevant governance indicators in a single model.
• Portfolio reallocations are used to assess the sources of performance changes, such as shifts in lending to Buenos Aires province and large-scale projects by foreign-owned banks.
• The dynamic effects of privatization are positive, but some performance improvements may be due to asset restructuring rather than genuine governance reforms.

Methodology

• The paper uses a regression model that includes:

  • Static governance indicators.
  • Selection governance indicators.
  • Dynamic governance indicators (dummies and quarters since the change).
  • Control variables for bank size and market share.
  • Year and quarter fixed effects to account for time-related variations in profitability.

• Dependent variables include:

  • Profit Efficiency Rank (based on ROE).
  • ROE (return on equity).
  • Cost Efficiency Rank (based on costs/assets).
  • Costs/Assets.
  • Nonperforming Loans (NPL).

• The profit function is specified as a translog function of five asset output categories, normalized by equity capital to reduce heteroskedasticity and provide more meaningful economic interpretations.

Context and Data

• The Argentine banking system underwent significant ownership changes during the 1990s, including:

  • A shift from provincial to foreign ownership.
  • The privatization of 16 institutions (14 provincial, 1 national, 1 municipal) between 1995 and 1999.
  • The creation of the Fondo Fiduciario to facilitate asset restructuring and privatization.

• The data set includes quarterly information on virtually all Argentine banks from 1993:Q2 to 1999:Q4, reducing the risk of sample selection bias.

Policy and Research Implications

• The paper underscores the complexity of corporate governance in banking and the need for comprehensive models that consider all three types of ownership.
• It also highlights the importance of governance reforms in improving bank performance, especially in transition and crisis economies.
• The results suggest that governance changes can have significant impacts on bank performance, but these effects may be misinterpreted if only a subset of ownership types is considered.

Conclusion

The study concludes that jointly analyzing static, selection, and dynamic effects of different ownership types is crucial for accurately assessing the impact of corporate governance on bank performance. It also emphasizes the role of governance reforms in improving financial system efficiency and stability, particularly in developing nations. The Argentine case provides a unique setting to explore these effects due to the extensive ownership changes and the availability of detailed data.